A plane that could change the game

Source: The New Nation

By Raquib Siddiqi

Cutting costs has become an obsession for major carriers worldwide. Nowhere is that more true than in the U.S., where big airlines in serious trouble with heavy losses, as they continued to battle rising costs. While foreign carriers tend to be in better shape, the industry knows the key to survival lies in being lean and mean.

If only carriers could get their hands on a Boeing 7E7 now. Experts say the plane, which will go into service in 2008, could redraw airline economics. Much has been said about the 7E7's fuel-sipping nature. But Boeing Co. (BA) is luring carriers with other potential cost savings, too. And thanks to more efficient factories, it aims to build each 7E7 in half the time it takes to crank out a widebody jet. That would get new planes to carriers faster when demand surges. "The 7E7 is a significant step forward for the economics of a plane," says Peter Gardner, vice-president for technical issues at Cathay Pacific Airways Ltd.

While U.S. carriers are not in a position to buy new planes now, Continental (CAL), American (AMR), and Northwest (NWAC) have all shown interest in the 7E7. Meanwhile, foreign carriers have ordered 62 7E7s, and Boeing expects 200 more orders by yearend. And while strong defense sales helped the company post second-quarter income of $607 million on $13.1 billion in revenues, reversing a year-ago loss of $192 million, Boeing is hiking its 2005 earnings forecast thanks to renewed strength in its commercial business. Says Boeing Commercial Airplanes CEO Alan R. Mulally: "We feel good about where we're going."

So will Boeing deliver? Much depends on getting its new manufacturing process right. In the 1990s, Boeing ramped up hard after putting in place a supposedly more efficient system -- with nearly catastrophic results.

This time, key suppliers believe Boeing will do better because it has been improving the work flow in its factories. "Nothing like a near-death experience to change bad habits," says Richard Aboulafia, an aerospace analyst at Teal Group. "Boeing's factories are more efficient than at any time in its history." Indeed, Boeing has cut the final assembly time of a 737 in half, to 11 days; Airbus has only been able to reduce its A320 final assembly from 40 days to 24.

With the 7E7, Boeing aims to work even faster. Suppliers will build huge chunks of the fuselage, which -- in a break with the past -- will be packed with plumbing, electrical systems, and computers before being shipped to Seattle for final assembly. By outsourcing more of the manufacturing, Boeing aims to build a 7E7 -- from start to finish -- in four months, rather than the traditional 12. The strategy, though, carries logistical risk, since it relies heavily on suppliers. Still, most analysts believe Boeing has established a sufficiently strong relationship with its partners.

Cheaper to fly

If Boeing can build its plane faster, carriers stand to benefit. Typically, by the time airlines take delivery of a new plane, they must reconfigure the interior because the market has changed. That's expensive: It once cost Cathay $1 million to shift a toilet three inches on one 747. "If you cut the delivery time in half, you can respond to market changes and avoid costly interior makeovers," says Gardner.

Carriers also like how the plane could help cut costs and lift revenues. The plane is expected to be 10 per cent cheaper to operate. Its composite fuselage won't require checking for cracks, which costs $2 million to $4 million per plane for aluminum jets. And its 20 per cent better fuel economy will allow airlines to carry cargo on longer flights, a potential revenue-booster.

Boeing still faces plenty of challenges. Airbus says it will respond with an improved or new A330, which will closely match the 7E7's operating costs. Boeing also will have to manage a whole new way of building planes. And with delivery three years off, airlines have time to see if Boeing can hit its performance goals. But if it does, the 7E7 could be the best news the industry has had in years.

© Copyright 2003 by ittefaq.com

Lean Automotive Supplier Uses Robots, Flex Machines to Increase Productivity

Source: Robotics Online

By Mary Kay Morel, Staff Writer/Editor, Motoman Inc .

Aztec Manufacturing Corporation (Romulus, Michigan) is a tier-one full-service supplier of mid- and high-volume precision-machined castings and forgings to the automotive industry. A minority-owned small business, Aztec currently employs 95 people in its 73,000 square foot facility. The company had sales of approximately $30 million in 2004 and projects $34 million in sales for 2005. Ford Motor Company is its largest customer. In keeping with its lean manufacturing initiatives that help the company stay cost-competitive, Aztec has successfully implemented several robotic work cells into its manufacturing process since 2001.

‘‘Aztec Manufacturing Corporation is committed to growing its business through investments in factory automation, which include the use of robotics in our machining and assembly operations,’‘ said Greg Lopez, the company’s president.

Automation has helped Aztec increase productivity and maximize throughput, improve part quality for the end-customer, and provide 100% part inspection for quality assurance. Robotic work cells perform some of the more ergonomically difficult tasks, primarily material handling and machine loading/unloading.

In 2002, Aztec implemented the first of three double-column, turret-type flex machines in the world. Built by Ann Arbor Machine Company (Chelsea, Michigan), and loaded/unloaded by Motoman robots, these highly flexible custom machine tools perform multiple CNC operations – drilling, tapping, milling and boring – all on the same machine. Each flex machine can have as many as eleven axes.

Unlike a typical CNC machine where the part is in a fixture and tools come in from the column, the tools that do the cutting in these flex machines rotate on the four-sided center turret. The fixtures that hold the parts are on columns that travel in three, four or five axes.

The robots load/unload two parts at a time into/from these flex machines. These can be identical parts or sets of RH and LH parts, depending on the operation. Each flex machine has two ends, so the robot loads/unloads the first end and then the other using a dual gripper. For some jobs, the robot facilitates A-B loading. It takes a set of partially machined parts out of one set of fixtures, turns them over and puts them into another set of fixtures for additional operations.

These AAM flex machines save floorspace and eliminate the need to transfer parts between multiple machines for CNC operations. This simplifies work flow and greatly enhances productivity.

In the first AAM flex machine cell, a Motoman UP50-35 robot picks parts from a power and free palletized infeed conveyor and loads/unloads an eleven-axis flex machine. After machining, the robot returns the parts to the conveyor, where an operator adds studs and feeds raw parts back onto the input indexing conveyor.

A Motoman UP130 robot picks up two identical front track-bar mounting brackets used in Ford vehicles and loads/unloads the second AAM flex machine. The robot first removes two parts from one end of the machine, rotates the gripper and loads two raw parts. It then repeats the process at the other end. The UP130 robot unloads track-bar mounting brackets two at a time from either end and drops the pairs ‘‘randomly’‘ onto dunnage, since there is no need to pack them in layers. The robot was actually programmed to drop the parts off so that they are evenly distributed around the dunnage.

‘‘We don’t do a lot of robot programming ourselves – mostly we just tweak the programs or touch up program points, as needed. We had a Motoman application technician come in to program the random packout operation,’‘ Terry Sims, Aztec’s engineering manager, said.

The third AAM flex cell uses another Motoman UP130 robot to facilitate A-B load of a set of raw RH and LH rear disc-brake adaptor parts for another Ford vehicle. The robot takes the finished parts to an automated probe inspection station that checks for the presence of threads in the four M8 holes in each LH and RH part. If the parts are acceptable, the robot places them on an indexing turntable. If the parts fail, the robot drops them off at a reject chute.

The turntable indexes parts through a partition fence to a Motoman UP50-35 robot that picks up a set of RH and LH parts and presents them to a bolt-running machine that shoots four bolts into each RH and LH brake-adaptor assembly. The UP50-35 robot then packs out the parts into separate dunnage containers for RH and LH parts located on an outfeed conveyor, and also places a stiff cardboard sheet between layers. When the two dunnage containers are full, they shuttle out on the conveyor and two empty dunnage containers shuttle in.

The company also uses robots for other machine-loading and material-handling applications. Another UP130 robot picks parts off of a walking beam conveyor and loads them into/from a CNC machine. This robot also packs out parts into dunnage and places thick cardboard sheets between layers.

Aztec’s first robot, a Motoman UP20, installed in May 2001, previously performed material handling for a part that is no longer in production. This robot is currently being redeployed to unload a conveyor coming from a dial index machine and a pair of horizontal machining centers (HMCs).

As a just-in-time supplier, delivering quality parts on time is extremely important for Aztec. As production volumes increased, Aztec implemented robotic work cells to improve productivity. ‘‘Operations in most of our work cells were never performed manually, so there is no comparison information between manual versus robotic production,’‘ Sims said.

‘‘Robots make the people we have more productive. We run three shifts of production a day, five days a week. Absenteeism is never a problem with the robots, because they are always there. The robots perform machine loading/unloading operations that would be ergonomically hard on a human operator,’‘ Sims said.

Production equipment reliability is a must. ‘‘Service and support were also keys for us when we were deciding to implement robotic automation. We haven’t had any trouble with the Motoman robots. If we need a spare part or help with something, all we do is call their customer service hotline.’‘ Sims said. Motoman’s Detroit facility is located in nearby Wixom, Michigan, and that physical proximity is also convenient if programming support or other assistance is needed.

Robotic automation has improved manufacturing processes and helped the company grow and prosper despite difficult times for the automotive industry. As a small business, Aztec Manufacturing has used the resources of the Michigan Manufacturing Technology Center (MMTC) to help with its lean manufacturing initiatives.

The company’s founder and CEO, Frank Lopez, is politically active in promoting the interests of small businesses and worker development, and was recognized as ‘‘Advocate of the Year’‘ in June 2005 by the Small Business Association of Michigan (SBAM).

First Sumiden embarks on a lean journey

The Manila Times

LEARNING & INNOVATION
By Moje Ramos-Aquino, FPM

IN its bid to curtail rising costs of production and remain competitive and profitable, First Sumiden Circuits, Inc., is undertaking a major revamp of its processes, structures, supply chain and customer interaction with what is known as lean manufacturing.

What is lean manufacturing (LM)?

LM is a series of proven techniques that cause work tasks in a process to be performed with minimum of waste resulting in greatly reduced wait time, queue time and other delays. It involves identifying and eliminating nonvalue-adding activities in design, production, supply chain management and in dealing with customers.

As waste is eliminated from processes, it takes less work and less material to manufacture products, so productivity increases. Higher productivity means making more products with the same amount of resources, so product costs go down. Other than reducing waste, the benefits of lean manufacturing are:

• Improved response time of a multiproduct line

• Improved quality

• Reduced manufacturing cost and inventory cost

• Improved productivity

• Improved customer-response time

• Gain in market share

• Improved revenues

In May First Sumiden hired the services of Dennis Hobbs, president of Manufacturing Matters, Colorado, USA, to conduct for its operations team a weeklong implementation training on lean manufacturing. By end of this year, lean manufacturing will be fully implemented in the whole manufacturing operations areas and by next year, First Sumiden will apply Lean Principles in its administrative areas. LM is being dovetailed with its current Six Sigma and other existing quality initiatives to accelerate organizational and environmental changes.

From these improvements, First Sumiden projects a savings of up to 20 percent of production space which can be used in the future expansion of its operations. It is looking at reduced manufacturing cycle time and improved inventory turns. LM will allow First Sumiden to meet customer expectations for lead time, on-time delivery and profitability as it competes in the demanding global market.

With LM, First Sumiden is now uncovering its nonproductive capacity. It is looking at stock-keeping, kitting and material handling. Later, it will remove a good deal of wait time, downtime, rework and scrap. It also hopes to eliminate firefighting and other time-wasting practices. Eventually it will be able to grow its business while maximizing labor efficiency.

Dan Lachica, First Sumiden president, says that all these initiatives are major determined steps toward its entry into the big league by strengthening competitiveness in the global electronics market.

(Moje, president of Paradigms & Paradoxes Corp. and RCQC North, awaits your feedback at moje@mydestiny.net)

Lean Manufacturing Through Factory Floor Innovation

TMCNET

Taking the concepts of the Toyota System and enhancing them with today’s information systems technology has been the key to allow some manufacturers to unlock the door that leads to a short-cut in process improvement projects. They are rethinking the good ideas of lean manufacturing and are using today’s factory floor information tools to quickly and easily improve factory floor performance, customer responsiveness and their bottom line.

Process improvement through a leaner approach and finite scheduling for the factory floor can be demonstrated in a number of ways:

Minimize cycle time
Minimize inventory
Meet customer expectations in quality and delivery
Look for ways to improve changeover
Empower the workers
Create a culture for continuous improvement

Creating a “culture” for continuous improvement can be realized through another lean concept… the use of visual aids. By making the factory floor activity visible through the use of the Manufacturing Execution System (MES), and measuring the flow times of parts on a continuous basis, the factory has a benchmark from which to identify areas that need improvement and the system to demonstrate those improvements.

For example, of the factories that are moving to lean manufacturing, how many have put a machine monitoring equipment in place to measure the flow time of a part? If there is a system that allows this basic metric, how many can tell the percentage of time that parts are being “value-added” verses the waste (or non value-added) time? Time is wasted during a downtime occurrence, waiting for a tool/die/mold or other necessary piece of equipment. Other examples of waste are times spent waiting for a quality check or unnecessary time in changeover/set-up.

With information systems for factory floor data collection, the analysis of the factory floor processes and the flow of parts, sometimes referred to as a “current state map”, can be made visible. If your company is going take action to improve the process then why not make the process flow visible and available all day, everyday. If improvement is truly continuous, then why make the evaluation of the flow episodic.

So why not think creatively from the get-go and put a factory floor information system in place that can help you and your company move forward with Lean concepts of identifying problems, the flow of parts, and measure change over times? Just because Toyota did not use electronic information systems, does not make it wrong to install them on the floor. To the contrary, it is the American Manufacturer that has the opportunity to improve on these Lean concepts with information systems that can be married into a Lean process improvement program.

1. Make sure the entire factory floor is involved with the system and that they are empowered to identify problem/alert situations.

2. Allow the system to provide a JIT production approach, which is dynamic and can be reactive to customer and floor demands.

3. Find a way to record changeover times tracked to specific assets and people.

4. Identify the opportunities for process improvement and keep a record of it.

5. Allow the floor personnel access to better communications like email where appropriate.

6. Improve the operator’s access to data by providing electronic “paperless” display of current, as well as, newer style electronic image and video documents.

7. Make the quality checks part of the process and capture it electronically so alert conditions of non-conformance conditions can be captured in real-time.

Implementation of Lean Manufacturing through a factory floor system can save time and money and put you in the driver seat towards more profitable production.

Think creatively. Use information tools creatively. Use the information tools that are designed to improve the process.

Manufacturers Improving Performance, Further Increasing Bottom-Line Results with Lean Strategies, Says AberdeenGroup

Business Wire

Manufacturers Improving Performance, Further Increasing Bottom-Line Results with Lean Strategies, Says AberdeenGroup; Report Cites Better Customer Responsiveness and Production Efficiencies Among Multiple Payoffs

BOSTON--(BUSINESS WIRE)-- July 12, 2005 -- Best-in-class manufacturers using lean techniques such as kanban and value stream mapping are now further leveraging these technologies to improve production efficiencies and customer responsiveness. According to a recent Aberdeen best practices research report, these companies are also reporting significant improvements in manufacturing performance and bottom-line results.

The new report, "Best Practices in Lean: The Momentum Builds," showcases nine best practice case studies, expanding on findings and insights first published in Aberdeen's 2004 "Lean Strategies Benchmark Report." That report cited that companies successfully able to implement lean techniques were up to three times as likely to become best-in-class performers, and up to six times less likely to be severely impacted by customer pricing and service issues. The results published in "Best Practices in Lean: The Momentum Builds" document further improvement on those original gains.

"Best-in-class companies are benefiting from lean initiatives and are in the process of deploying lean techniques across manufacturing, into the enterprise, and out to supply chain partners -- including customers and suppliers," says Jane Biddle, vice president of manufacturing research for Aberdeen, and author of the report. "Each company represented in the best practices report is clearly a leader in its category."

The nine companies profiled in this study illustrate success strategies and the business challenges they faced; lean strategy investments; technology deployments; as well as results from their strategies and technology investments.

Major study findings include the following:

-- Customer, competitive, and shareholder pressures are driving manufacturers to expand lean programs;

-- The number of technology solutions continues to increase the deployment options compared to what was available just 12 months ago; and

-- Technology-enabling lean practices are becoming requisite for achieving scalability, manufacturing flexibility, and managing a truly customer-responsive supply chain.

To download a complimentary copy of the report, please follow this link: http://www.aberdeen.com/link/sponsor.asp?cid=1950

About AberdeenGroup, Inc.

AberdeenGroup provides fact-based research and insights focused on the global, technology-driven value chain. Aberdeen's benchmarking, market and solution assessments, sales acceleration programs, and conferences support Global 5000 value chain and technology executives -- and the solution providers who serve them. For more information, visit www.aberdeen.com or call 617-723-7890.

'Lean' manufacturing tested at local company

The Free Press

Karen McConkey
Staff writer

The first day Southern Vinyl line assistant Darrell Thomas participated in a Lean Enterprise event, he was a bit skeptical.

Streamlining his job at the vinyl manufacturing company sounded a little ominous. Thomas soon got over his skepticism.

"Once I saw this idea begin to work, I thought it was a real good one," he said.

Lean Enterprise isn't a new concept. It was conceived by global automobile manufacturer Toyota in the 1970s and made its way westward during the past two decades. The idea behind lean manufacturing is to measure efficiency and reduce waste of time on the production lines of large manufacturers.

With 26 employees, Southern Vinyl in Kinston was scarcely a logical candidate for testing the principles of waste. But test they did, co-owner Dean Ervin said.

"It changed the way our production line operates," Ervin said. "It has definitely increased the quality of our products. And for me, it gives me 99.5 percent guarantee that every product we ship out will have every single component it's supposed to have. That is a tremendous sales tool."

Southern Vinyl received a $37,500 grant from Eastern Carolina Workforce Development to conduct "events" that train employees in lean manufacturing methods. The first event ended successfully just last month and Ervin said everyone benefited.

The company makes PVC porch rail kits and PVC fencing. Each requires a separate manufacturing process.

Kris Nicholls is one of Southern Vinyl's first line supervisors in the porch rail to train in lean manufacturing.

"I'd heard of this before," Nicholls said. "At first, it was a little tough because our whole line was changing. But about half way through the week, it really showed us that something good was coming out of it."

The "something good" means that Nicholls and Thomas, along with production manager Aaron Myers, make fewer steps, expend less wasteful time and energy, and yet increase their production each day.

"This concept taught us that we need to be a little more open-minded about our process," Myers said. "We also need a willingness to change, a willingness to be open to doing our jobs a little differently."

Since participating in the event, the three employees are pleased with the outcome.

"I know it's had nothing but a positive effect on the quality of our work," Myers said.

Oddly enough, when the training begins, company owners are asked not to participate.

"The whole idea is that this needs to be based on what employees see as a better way of doing things," he said.

Myers said employee input was vital to the company's production process.

"We want our employees as participants," he said. "They need to know that what they think does make a difference."

The company celebrated its eighth year in Kinston just last week. It opened its doors in 1997 with two employees and went from zero dollars in sales to more than $2 million annually in just 18 months.

"Our growth has just been phenomenal," he said.

The company plans to use the remaining grant money to conduct a lean event in its customer service office, and then move over to its fencing manufacturing line.

"We're really pleased to have the opportunity to do this," Ervin said. "I think we've all benefited from it, from the front office to the end product to our customers."

Karen McConkey can be reached at (252) 527-3191, Ext. 232, or kmcconkey@freedomenc.com.

Lean Enterprise

Origins

The ideas behind what is now termed "lean" thinking were originally developed in Toyota's manufacturing operations known as the Toyota Production System and spread through its supply base in the 1970s, and its distribution and sales operations in the 1980s. The term "lean" was coined because it describes the key elements accounting for superior performance as "lean" production. Japanese business methods use less of everything: human effort, capital investment, facilities, inventories and time in manufacturing, product development, parts supply and customer relations.

The Key Lean Thinking Principles

The starting point is to recognize that only a small fraction of the total time and effort in any organization actually adds value for the end customer. For most production operations only 5 percent of activities add value, 35 percent are necessary non-value adding activities and 60 percent add no value at all.

Source: N.C. State University Industrial Extension ServicesLean Enterprise Advancement Program.

Lean Maintenance—Does It Impact Reliability? Lessons Learned and Best Practices

Technology Evaluation

Featured Author - Ricky Smith

What is Lean Maintenance?

Lean manufacturing, lean maintenance, and the whole lean concept have had many successes, but many companies have not achieved the results they expected. There are many reasons why lean maintenance fails, but the number one cause of failure is the lack of focus on reliability. To understand this, we must start by defining lean maintenance.

Lean maintenance is a proactive maintenance operation employing planned and scheduled maintenance activities through total productive maintenance (TPM) practices. It uses maintenance strategies developed through the application of reliability centered maintenance (RCM) decision logic and is practiced by empowered (self-directed) action teams using the 5S process, weekly Kaizen improvement events, and autonomous maintenance. Multi-skilled, technician-performed maintenance is also done through the committed use of a work order system and computer managed maintenance system (CMMS) or enterprise asset management (EAM) system. The team is supported by a distributed, lean maintenance, or maintenance repair organization storeroom that provides parts and materials on a just-in-time (JIT) basis, backed by a maintenance and reliability engineering group that performs root cause failure analysis (RCFA), failed part analysis, maintenance procedure effectiveness analysis, predictive maintenance (PDM) analysis, and trend and analysis of condition monitoring results.

Defining Maintenance and Reliability

The problem most companies have is that they fail to define lean maintenance. In the aforementioned definition, you will find that reliability is a key ingredient in this process. I have always asserted that without reliability, you cannot have maintenance. The two are integral to each other and woven together. Without the two you cannot have capacity.

Let’s look at the definitions of maintenance and reliability:

Maintenance: The act of maintaining—to maintain is to keep in existing state.

Reliability: The ability of an item to perform a required function under a stated set of conditions for a stated period of time.

Thus “without maintenance we have no reliability and without reliability, no maintenance,” so what are the failures or trip wires, as I call them, that we see in lean maintenance implementation?

1. Lack of focus. Ask operations and maintenance the same question: “Where should we focus our efforts to improve operational performance using lean principals?” and you’ll get two different answers. If no technical basis is used to assess the potential impact of asset failure, then you’ll get a wide range of answers—with no focus on the business impact of the change.

2. Lack of understanding of the function of an asset. The required functions and associated performance standards of equipment have never been defined with the reliability approach to capacity, which is the RCM process. In the definition of lean maintenance, you will find RCM as a key component to defining an asset’s function and associated performance standards. In other words, we do not know what the requirements are for an asset to provide what a company needs, in order to meet the company’s business goals. I have found the common thread among companies that are truly successful is the ability to define the functions and performance standards for key assets. Their reliability programs are focused around the reliability approach to capacity that pays attention the business needs of the company.

3. Lack of ownership of asset reliability. When lean is implemented, many times companies don’t include the maintenance department, and see this process as a production project only, forgetting all about maintenance until the company needs maintenance’s help. I honestly believe that a company should own the reliability of an asset and the maintainability of it as part of a partnership. Maintenance provides the technical resources to ensure the reliability of an asset in order to meet a company’s capacity and business goals.

4. Time-based preventive maintenance (PM) is used instead of the reliability approach to capacity to focus on what is required for an asset to meet the business goal(s) and what the process will entail. Time-based PMs can cause equipment to be down unnecessarily and failures can be induced by performing intrusive PMs. Many times, maintenance costs are higher than they should be because of time-based PMs.

5. Process for the sake of process. Companies focus on changing the maintenance process instead of using the same energy to focus on the reliability needs of the asset. I am not saying you do not need a strong maintenance process, but if you don’t understand the reliability needs of an asset enabling it to meet the business goals of an operation, then how do you develop a maintenance process?

The Reliability Approach to Capacity

So what can you do? I recommend that you follow these steps to success. I call this the reliability approach to capacity.

1. Perform a risk prioritization analysis of your assets. This process helps the company to focus and get results quickly, which in a lean world, makes good business sense. Asset risk prioritization defines all of your assets in a ranking that is in-line with the business goals of your company, as defined by management. This process allows you to know which assets provide the largest impact to your operation, and allows you to calculate a return on investment as a reliability approach to capacity.

2. Take one asset at a time, starting with the assets that have the biggest impact (based on the risk prioritization). Identify the functions of the asset, its performance standards (what we expect an asset to do in its present operating context), what the functional failures are, and what failure modes have occurred which cause the functional failures.

3. Identify proactive tasks that need to be taken to identify a potential failure—a reduction of equipment reliability leading to functional failure. Proactive tasks identify the reliability status of an asset in order to induce an activity to restore the reliability of the asset—before a functional failure occurs. Remember a failure is defined as “the inability of an asset to do what its users want it to do”. Some of these proactive task are

1. Condition-based monitoring. This can be performed with remote devices, handheld devices, or through visual means.

2. Predictive maintenance. This includes vibration monitoring, ultrasonic monitoring, infrared monitoring, and others.

3. Time-based PMs. Yes, these do have their place, but only after a reliability assessment has identified the need.

4. Next you must determine what must be done to the asset to restore reliability, once the equipment is reduced to a point where failure is known to occur in the near future. This can be done through scheduled restoration, or if the consequences of failure are minimal, you may want to operate the asset to failure. Most of the time, this is not an option. If an acceptable proactive task cannot be defined, redesigning or replacing the asset (with new technology) may be required.

5. Finally, market the success of this process internally and externally and then continue this process with the next asset, as identified through the risk prioritization analysis.

Warning: If the asset is not maintainable, then restoration must be accomplished. Remember you cannot maintain an asset that is not reliable.

Finally, accomplishing this process will ensure lean maintenance in your organization is successful in the short and long term, and when done properly, it can double or quadruple your return on investment.

About the Author

Ricky Smith, CMRP (certified maintenance and reliability professional), CPMM (certified plant maintenance manager) , has worked in over 400 plants world wide with over 30 years experience in maintenance and reliability as both a practitioner and consultant, author of numerous books that include Lean Maintenance by Elsevier Science Publishing Company.

The Art of Lean

Source: The Sunday Challenger

By Michael Rovito
The Sunday Challenger
feedback@challengernky.com

Slimming Companies' Shipping Costs


Submitted photo
WAY TO GO: LeanCor employees Jennifer Ridner and Vimal Patel plot suppliers on a U.S. map to establish potential distribution routes.

FLORENCE - After more than a decade in the transportation, consulting and third-party logistics business, Robert O. Martichenko had a vision, a lean vision.

"I have been doing a lot of work over the years in lean manufacturing," Martichenko said of his work in a relatively different style of shipping logistics.

Martichenko resigned from his job and set out last year to start a company that would take over the responsibilities of shipping from a manufacturer and implement the lean manufacturing style.

In January, LeanCor was born.

Going Lean

The lean style is the process of eliminating all waste in a manufacturing company by streamlining and simplifying shipping.

Three key tools, according to Martichenko, make for a successful lean style: increased frequency of deliveries, reduction of lot size for those deliveries and leveling the flow of material in a plant throughout the week.

"Over-production is a big problem in companies. They pay too many people to do too much when it could be leveled off," he said.

LeanCor specializes in applying what Martichenko knows about lean manufacturing to other companies in need of better shipping strategies.

"Companies that are not embracing lean manufacturing are spending so much time (on shipping) they are not competitive in their market place," said Martichenko.

Based in Florence, only four employees currently staff the company, which Martichenko said has hit roadblocks, as most new businesses do.

"When you are a small company in our field you have to provide 24-hour, seven-day-a-week coverage," said Martichenko. "Now we are an extension of shipping companies, if we make mistakes a whole line can shut down. It's made for some long days."

Currently, day-to-day activities at LeanCor revolve around "consulting projects and daily operations with one of the first companies to sign on with LeanCor, Maytag," said LeanCor Director of Operations Kevin von Grabe.

LeanCor handles Maytag's ordering and logistics for 15 suppliers in the Chicago area.

"We're utilizing trucks better than what they were doing," said Martichenko.

Besides Maytag, LeanCor is working with Dupont and DNR Technologies, a Chicago-based automotive supplier.

"Heart of the Midwest"

Martichenko, co-author of a book on lean manufacturing and a member of the editorial advisory board of Logistics Quarterly magazine, said Florence is where he wants LeanCor to stay because of its proximity to the manufacturing belt of America. Being near Interstate 75 is another advantage because, as Martichenko sees it, it's the manufacturing corridor from Toronto to Atlanta.

"Florence is a fantastic place to be because it is in the heart of the Midwest, which is a major shipping center of America," said Martichenko.

Not only does he want to stay in Florence, but Martichenko also said he wants to work with companies in the area to make local businesses prosper as well as the big name companies.

"We want to start developing relationships with local Northern Kentucky manufacturers to help them consolidate their volume," Martichenko said. "We want them to have their logistics systems be like big companies like Toyota."

Martichenko knows all about how Toyota's shipping system works because he set up the inbound logistics at Toyota Motor Manufacturing in Indiana. He also said he knows that same style can happen here with local companies.

"When smaller companies come together to consolidate their shipping, it will make for a more efficient and cost-effective system," Martichenko said.

Manufacturers with similar products can work together, under the lean manufacturing principle, to cut costs by merging their shipping activities. And that is just one goal of LeanCor.

Being the founder of a new company, Martichenko said he has more goals, short-term and long-term, each of them having to do with building a presence in the industry.

"We want to build and develop a lean supply chain company... and service customers where they need us to go," Martichenko said.

For the long term, Martichenko is thinking beyond Florence and hopes that in five years LeanCor can have 100 salaried employees.

"Our long-term goals are to build a substantial company, global in nature," he said.

5 S's spell efficiency

Groesbeck metalworkers use lean principles

By Mike Boyer
Enquirer staff writer



The Enquirer/Steven M. Herppich
Dan Centers grinds down welds on a commercial box at the Metalworking Group on Pippin Road. The factory has been streamlined and reorganized to increase productivity and cut costs. The company has seen a 50 percent increase in sales over the last year.


WHAT THE S'S STAND FOR
The basis for improvements under lean manufacturing techniques is a process of cleaning and organizing the workplace known as the 5 S's.

Here's what the S's stand for:

Sort: Remove unnecessary tools and items that aren't used regularly to gain space and improve visual organization.

Straighten: Arrange needed items, making it easier to find them when you need them.

Sweep: Clean the work area to improve quality and identify problems.

Standardize: Train everyone in the work area and establish minimum standards.

Sustain: The hardest task is maintaining the other four by making the changes part of the everyday routine through schedules and checklists.

Source: Edwin H. Colby Associates

GROESBECK - The Metalworking Group, a Groesbeck metal-stamping plant employing 100, produces about 800 different items regularly for dozens of different manufacturing customers.

Because the plant's work is so diverse, owner Mike Schmitt was skeptical that the so-called "lean" manufacturing, a process of streamlining and standardizing work processes, would work in his job shop on Pippin Road.

But after being introduced to the concepts popularized by Toyota through a customer, Liebel-Flarsheim Co., a Reading-maker of medical imaging equipment, and working with Edwin H. Colby Associates, a Fort Mitchell firm that specializes in implementing the techniques, Schmitt has become a believer.

The idea that lean manufacturing won't work in a job shop is just false," said Schmitt. "Seventy to eighty percent of our processes are repeatable."

Last year, the Metalworking Group had revenues of $16 million, up about 50 percent from a year ago, but it isn't standing still.

To stay competitive, the company brought in Colby Associates to teach employees how to implement lean techniques - basically a systematic approach of empowering workers to continually eliminate waste and improve productivity of their jobs.

"Mike Schmitt is smarter than the average guy because he knows what he doesn't know and he's willing to try something,'' said Bruce Cayes, managing partner at Colby.

Says Schmitt: "The message of the lean manufacturing journey is that you have to look at your operation and eliminate every bit of waste that you have."

The first step was implementing what's known as the "5 S's" - basically a process of cleaning, sorting, standardizing the work areas and sustaining the changes every day throughout the 76,000 square-foot plant.

Walking through the plant, Schmitt points out what used to be disorganized chaos with parts and tools scattered about but now is a clean and organized work area. Even the areas for trash cans are clearly marked on the floor.

"If you'd seen this area before we started, you would have thought, how does anybody get anything done back here," said Eddie Gray, 48, of Springfield Township who works in the plant's paint shop.

"It was dirty," he said. "We powder paint quite a bit so you have a lot of dust. We had a lot of trouble with parts having dirt on them when they came in for painting."

Now the paint area is organized with tool areas clearly marked. Workers are required to go through a checklist to clean their work areas at the end of each shift.

The next step of the lean process is organizing and streamlining work areas to eliminate unneeded steps. About two-thirds of the plant has gone through this process. Workers break down into teams and, armed with stopwatches and clipboards, they time and map out every step on a particular job, looking for ways to eliminate waste.


A faster metal box

One of the plant's most successful projects so far has cut the time it took to produce a 2-foot by 3-foot metal box for a customer from 90 minutes to 30 minutes by reorganizing the welding area.

"We used to grab parts which were scattered all over the building," said Josh Bradley, 21, a welder from Colerain Township. "We'd spend about 20 minutes looking for a part, then you'd take it to your welding booth and weld it up."

Sherry Decker, client service director for Colby, said an employee team spent about a half day learning how to gather data.

"They figured out how much space was needed and how much time the process should take,'' she said.

Says Bradley: "While we were (organizing the process) it seemed kind of rough. But now that we're actually doing it and producing a finished product, it's a killer."

With all the parts in easy reach, he says, the job is much easier.

"What we've tried to do is turn ownership of the product over to the guys in the shop," said Cayes.


Workers get organized

He said some managers assume that because an employee works in the shop he's not capable of organizing his work area or operating it more efficiently.

What they overlook, he said, "is at the end of the work day, those same workers go home and organize their children's soccer league or softball team, or they run a school PTA or other community activity."

The lesson for U.S. manufacturing, he said, is: "We have the most productive workers in the world but we're never going to beat the Chinese on labor rates. There will always be somebody with cheaper labor, so we've got to operate smarter."

Is Document Process Automation The Next Step In Lean?

Industry Week

Manufacturers are automating documents to improve processes in accounting, distribution and on the shop floor.

Wednesday, July 06, 2005
By Paul Savage is director of Channel Sales

Lean manufacturing initiatives both on and off the shop floor have helped companies reduce costs and improve productivity. To build on gains achieved within lean manufacturing, companies are now looking at ways to use ERP software to automate the documentation process.

While documents remain integral to processes such as shipping, distribution, financial accounting and communication with the supply chain, currently ERP solutions treat these documents as exceptions. Manufacturers are now turning to Document Process Automation solutions to automatically input, share, store and deliver high-quality custom business documents across paper and electronic formats. Automation used in finance, shipping and distribution can provide self-service for improved supplier and customer satisfaction and also improve cash flow.

Improving Accuracy, Productivity And Branding For Financial Documents

By combining automated document processes with integrated enterprise-wide ERPs, manufacturers are creating straight through, automated order-to-invoice processes that streamline the entire financial operation. These solutions help manufacturers more easily comply with stringent customs regulations by including tariff codes, weights and measurements within invoices without the need for manual data entry.

Document Process Automation utilizes sophisticated document formatting capabilities that produce corporate branded documentation, such as orders, purchase requests, delivery notes and invoices and automatically deliver the documents via email, fax and over the Web. Inbound document imaging capabilities scan in documents, including materials certifications for online storage and instantly cross-linking them to information about a shipment within the ERP. Integrated storage and retrieval make all outbound and inbound documents instantly available on a self-service basis to enable employees or customers to instantly view documents to answer questions or resolve disputes.

Streamlining Shipping and Distribution Processes

Within the shipping and distribution processes, manufacturers use Document Process Automation solutions to create highly complex labels that meet FDA and international regulatory requirements as well as customize shipping documents that help speed and streamline distribution processes.

Labels, product documentation, and packaging for discrete manufacturers can be extremely complex. For example manufacturers of lifesaving medical devices need to produce products in a wide range of configurations, with a large amount of detailed documentation included in the shipment. In addition, to ensure proper implantation of the devices, very small and precise labels in multiple languages need to be included. The documentation must also address FDA and international regulations that require devices to ship with information regarding the source and details of its manufacture. Document Process Automation can create content that supports all of the design, language, and format requirements and simultaneously ensure consistent control and quality, regardless of system, printer or location.

Improving Shop Floor Processes

Document Process Automation can streamline processes on the shop floor itself through pre-sorted pick/pack lists, work order management and easier access to related documents.

For discrete manufacturers, Document Process Automation will sort items on work orders, pick lists, and part labels in the order that the actual parts appear in the stock room so workers can pick the order or put labels on parts without backtracking, thus improving efficiency of the work process.

Work orders are often accompanied by packets of related documents, such as certifications for raw materials, design documents and specifications. If manufacturing is distributed geographically or subcontractors perform portions of the manufacturing, it can be easy to lose the documentation or include the wrong documentation. Document Process Automation solutions can eliminate these problems by making copies of all necessary documents available online over the Web to authorized users.

Automating Documents to Improve Efficiency

Lean manufacturing is about streamlining every aspect of manufacturing operations, both on the shop floor and off. While manufacturing organizations have used ERP solutions to simplify many processes, documents have remained manual. With Document Process Automation, manufacturers are now automating documents to improve formerly manual document processes in accounting, distribution, and on the shop floor and thereby further enhance the efficiency of their overall operation.

Toyota Runs Low on Expertise to Power Global Push

KCAUTV.COM
By Norihiko Shirouzu

As it races to add new factories in North America and around the world while trying to maintain quality, Toyota Motor Corp. is bringing in outside help to run its much-studied and much-copied "lean manufacturing" system.

For as long as Toyota has existed, the company has relied mainly on its own highly-trained workers for manufacturing expertise to ensure that all Toyota plants conform to the rigorous Toyota Production System. That system has been at the core of Toyota's ability to build vehicles more efficiently, more profitably and with more-consistent quality than most of its rivals.

But now, the world's second-biggest producer of automobiles after General Motors Corp. is scrambling to find enough in-house Toyota Production System experts. In a significant shift, Toyota is turning to affiliated assembly-specialist companies to cope with the challenges of its ambitious plan to grab 15% of the world auto market -- about as much as GM has today -- by 2010.

Chief among those challenges: a shortage of quality gurus. There are signs the company's torrid growth agenda is straining Toyota's human and technical resources and allowing competitors to catch up with it on quality, one of Toyota's most critical strategic selling points.

Now, from Argentina and Brazil to China and South Africa, manufacturing experts from Toyota-affiliated assemblers such as Kanto Auto Works Ltd. and Toyota Auto Body Co., both of Japan, are working side-by-side with their Toyota counterparts to help open new plants, update manufacturing facilities, cut costs and train local workers.

Toyota's assembler affiliates belong to the Japanese auto titan's sprawling keiretsu, or network, of parts suppliers and other companies that are linked through cross-shareholdings, exchanges of key managers and long-term contract relationships. Previously, their work with Toyota has been largely limited to Japan, producing Toyota-brand cars and light trucks.

Art Niimi, Toyota's former manufacturing chief in North America who was promoted last month to become a senior managing director at Toyota's global headquarters, said one objective is to eventually "outsource" to those affiliates entire or partial management of some manufacturing plants outside Japan, probably including those in North America.

Many quality gurus at those subsidiaries are well-versed in Toyota's methods. But one big risk to the auto maker is their level of expertise as younger and less-experienced engineers are entrusted with managing some day-to-day operations outside Japan.

Toyota is trying to prepare for the day when "if the situation warrants it, we can entrust management of one entire [Toyota] plant to our group company like Kanto Auto Works," Mr. Niimi said.

"From here on, we are committed to operating around the world by using the combined capabilities of the Toyota Group as a whole," he said. "We may be running out of resources as a company, but as a group we still have plenty of resources."

Various aspects of the Toyota Production System, with its central concept of continuous improvement in every process, are widely copied not only by rival auto makers, but also by auto-parts suppliers, supermarkets and other retailers, even hospitals.

Toyota executives hope its affiliates can help it manage growth globally, including in North America. Toyota still tends to outscore its rivals there -- including GM, other Detroit auto makers and those from Europe -- on industry surveys of quality and reliability. But its lead has narrowed and, in some key segments, disappeared.

In addition to Kanto Auto Works and Toyota Auto Body, among Toyota affiliate-assemblers are Central Motor Co., Toyota Industries Corp. and Gifu Auto Body Co.

In another effort to deal with the lack of manufacturing resources in North America, Toyota is likely to locate a future plant close to an existing facility in what the company calls a "concept of satellite plants" to share the experience and expertise of an existing assembly plant.

The company did just that late last month, when it unveiled plans for a Canadian plant just a half-hour drive from its nearly 17-year-old assembly plant in Cambridge, Ontario.

Meanwhile, in an effort to make the Toyota Production System easier for new recruits to learn, Mr. Niimi said he is ready to make broader use of what he describes as one of Toyota's secret weapons in manufacturing: the new in-plant logistics method to deliver parts to the assembly line, internally referred to as "kitting."

Kitting refers to a system in which workers synchronize packages of parts with the order of vehicles heading down the assembly line and place the part kits inside the vehicle under construction. The procedure has allowed Toyota to eliminate almost all the parts shelves that typically flank a plant's assembly line.

First green, then lean

Industry Click
Martha Blastow
Concrete Products, Jul 1, 2005

Not content to rest on its laurels after opening the first concrete plant designed for U.S. Green Building Council's Leadership in Energy and Environmental Design certification (see Concrete Products, April 2003, “Taking the Leed”), Castcon-Stone Inc. has begun implementation of a Lean Manufacturing protocol. The Saxonburg, Pa.-based precast stair producer is taking cues from heavy hitters like Toyota Motor Co., one of the most prominent users of Lean Manufacturing, to optimize operations at its new 47,000-sq.-ft. facility.

“People think the process applies mainly to manufacturing widgets,” notes Castcon President Laura Huch-Kerckhoff, “but we see many potential benefits in a concrete plant setting.” Though Tindall Corp.'s Petersburg, Va., facility and High Concrete Structures' plant in Lancaster, Pa., follow the protocol, Castcon is pioneering the first companywide application of Lean Manufacturing among concrete producers. “The advantage of our size,” says Huck-Kerckhoff, “is that we can readily implement the system throughout the entire organization.”

Hiring James Clark to fill the newly created position of chief operating officer marked the beginning of Castcon's deployment of new production strategies. Under his direction, a Lean Manufacturing workplace will be established on the basis of a program of organization and cleaning whose benefits are said to include greater safety, higher productivity, fewer product defects, maximum efficiency and timeliness at lower cost. The initial phase of this paradigm shift is nearing completion, contributing to a 22 percent sales increase in the fiscal year ending May 1 and an anticipated further gain of 15-20 percent this year.

According to Clark, any manufacturing environment, especially a ‘green’ facility like Castcon, is challenged to make better use of labor and materials. Applying the 5S principles — sort, set in order, shine, standardize, and sustain — that comprise the foundation of Lean Manufacturing, the facility was able to regain two 35-ft.-wide × 18-ft.-deep mezzanines previously filled with primarily disposable materials. One of those areas is now used to prepare metal nosings for stairs; the other will be dedicated to an expanded quality program.

Modifying the plant layout to optimize efficiency also involved the addition of stair form stations, bringing the total to eight, plus four to five platform areas. Concurrently, forms on axles were placed instead on stable legs, as overhead crane equipment made greater mobility superfluous. Reconfiguring the entire plant floor as needed is still easily accomplished, Huch-Kerckhoff observes.

Another measure facilitating ‘quick changeover’ or single-minute exchange of dies (SMED) is the replacement of 6-ft.-long × 7-ft.-high workbenches at each station with mobile tool carts. After the prototype currently in use is refined, a cart will be provided for each stair builder to transport tools and supplies. The flexibility and time savings thus gained reportedly reduce many tasks from hours to minutes.

Production Teams also contribute to greater efficiencies on the plant floor. Assigning a team to multiple forms and allowing its members to coordinate production activities reduces work time dramatically. This impact is especially evident in minimizing nonvalue time involved in setting up a stair form: the time required to travel the 85-ft. circumference of a 35-ft. × 7-ft. form is halved when a two-person team tackles the job. Like a NASCAR pit crew, says Huch-Kerckhoff, a team can better examine the condition of forms and prepare them for production, thereby contributing to quality and efficiency. Accordingly, Clark affirms, “Quality is owned by the production people.” Builders are expected to make the part correctly the first time and to stop the process immediately if a problem arises.

Work flow is further supported by a change in management structure. Team leaders now replace floor supervisors. A newly reorganized quality department is headed by a skilled manager whose experience allows him to oversee both quality and project management functions. A new manager has joined the project management staff, and a quality technician will soon be added to provide a testing specialty in the quality control department.

“Our quality and project manager is passionate about mix design to meet and exceed customer and worker expectations,” says Clark. For improved workability and high performance, especially for transit-project mixes, he is supervising the examination of various admixtures and cementitious materials, including ground granulated blast-furnace slag (GGBS), silica fume, and pozzolans. A thorough exploration of options will determine conventional and self-consolidating concrete mix designs.

In addition to plant layout, point-of-use storage, formwork, team effort, and mix design, a significant component of Castcon's Lean Manufacturing program is employee feedback. Instituting a formal procedure to handle employee suggestions involves garnering ideas, tracking results, and setting timetables for issues to be addressed by appropriate teams. “When people see that their suggestions are taken seriously, they are far more likely to submit ideas,” contends Huck-Kerckhoff. “Since establishing formal channels for employee input, we have implemented many excellent suggestions, especially with respect to storage and yard management.”

Clark emphasizes that Lean Manufacturing is a tool — a means, not an end — to remove the roadblocks to measurably greater productivity and higher quality. “In our mission to provide quality, value, and service,” he asserts, “Lean Manufacturing enables us to be more efficient while putting the customer first.” Using SMED ‘quick changeover’ techniques to reduce form set-up time, for example, permits a cellular manufacturing approach by which “we can make what we need when we need it,” Clark notes. Such a protocol relieves storage pressures, eliminates handling goods more than once, and facilitates form maintenance.

Previously, in casting various components for a job, the highest possible number of pours was attempted with one form before changing to the next. As changover has been expedited, Castcon now casts components according to the customer's schedule. Huch-Kerckhoff explains, “A customer building a parking structure typically wants one stair tower produced at a time; masonry construction or a steel building requires stairs floor by floor. Now, we can accommodate those schedules rather than produce in bulk.” Especially as design-build construction becomes the norm, she continues, production flexibility is key, because securing a schedule at the outset for the entire project is increasingly difficult.

Also in response to customer feedback and market demand, Castcon is rolling out its latest offering — a total precast stair tower. Prospects for its use in construction of New York City's PATH underground station were recently discussed with officials of the Downtown Design Partnership, consultants in Ground Zero redevelopment. High rises, apartment buildings, and municipal structures are likewise seen as promising applications for the stair system.

Yet, Huck-Kerckhoff avers, “We're just at the tip of the iceberg in becoming more adaptable and efficient.” Adds Clark, “We have implemented only the initial phase of a paradigm shift, which says ‘We can do better.’”

Further demonstrating that commitment to ongoing development, Castcon is partnering with the University of Pittsburgh's Civil Engineering Department to substantiate by means of quantitative analysis the anecdotal evidence of ‘green’ building benefits. Through 2009, the project will examine and measure productivity gains, employee perceptions, and energy savings related to ‘green’ construction. Clearly, as Clark maintains, ‘Lean and green’ is “not a destination — it's a journey.”


LEAN ORIGINS

Early attempts to boost company profits by implementing strategies to improve output, reduce costs and increase market share can be traced as far back as Eli Whitney and Henry Ford. Subsequently, Japanese manufacturers rebuilding after World War II were challenged by a drastically reduced workforce, limited raw materials, and little money — conditions that led to the development of ‘lean’ practices, known then as “just-in-time” manufacturing. Japanese business leaders like Toyota Motor Co.'s Eiji Toyoda, Taiichi Ohno, and Shingeo Shingo implemented a disciplined, focused production process incorporating Ford's assembly line, Statistical Process Control, and other techniques to minimize resource expenditures that add no value to the end product.

Following the 1990 publication of James Womack's “The Machine That Changed The World” — a straightforward account of the history of automobile manufacturing including an examination of Japanese, American, and European automotive assembly plants — Massachusetts Institute of Technology undertook a formal study of the mass-production process described in the book. Thus, given further credibility by a renowned academic institution, the Lean Manufacturing theory gained widespread popularity in American factories and continues to set the standard for mass production.

Globalizing lean

My ESM

Shoshanah Cohen and Anthony Paolini

Supply chain executives know that opening a manufacturing facility in China brings with it the opportunity for lower labor costs and increased profit margins. They also know from experience with existing plants in their home markets that Lean concepts can fuel process efficiencies, reduce inventory and eliminate waste. Indeed, Lean is a highly successful tactic for pulling ahead of the competition.

What those executives are now trying to figure out is how to mesh the two by bringing Lean practices to China.

It's a complicated challenge, to which leading-edge companies like Boeing, Celestica and Whirlpool can attest. They are finding that Lean strategies that have been successfully deployed in factories in North America must be rolled out differently in China.

Most important, a solid understanding of China's culture, politics, labor and business practices is essential for successful implementation.

First steps
Lean concepts offer a proven, structured way to increase quality and lower costs throughout the supply chain. When Lean is deployed in a manufacturing environment, companies often realize immediate improvements in cycle times, inventory levels, product quality, costs, asset performance and scheduled delivery targets. The impact on the business and financial performance of a company can be significant.

A Solectron Corp. plant in Milpitas, Calif., for example, reduced the lead time for pc board assembly from more than eight days to less than two, while increasing quality from 91 percent to 96 percent. At the same time, the facility's inventory was reduced from 20 days of supply to just six.

With results like this, it's only natural that companies are eager to roll out Lean practices in locations known for low labor costs, such as China. But China, while now a world-class manufacturing hub, is not experienced with modern production concepts, and executives must find ways to address those shortcomings if they want their companies to fully leverage all potential advantages.

There are four areas on which to focus:

Culture
Perhaps the biggest challenge for Westerners is the deep-seated cultural and business differences that exist in China. For instance, companies implementing Lean principles must contend with the different perceptions of personal empowerment.

Unlike in the West, Chinese employees have not had as much exposure to management styles that break away from traditional command-and-control hierarchical structures. Since the upper echelon in the government or corporations commonly dictates rules, the notion that an individual worker can foster change requires a fundamental shift in thinking. What's more, obedience to an established hierarchy is not limited to the formal management chain, but exists within an informal network too.

A case in point is BHA Aero Composite Parts Co. Ltd., an equal-share joint venture among Boeing, Hexcel and the Aviation Industries of China 1. BHA found that one of the biggest hurdles in implementing Lean was convincing workers that it is acceptable to come up with innovative ideas for improvement.

Constant encouragement and reminders were needed before employees began to embrace the idea of sharing their opinions, but once they were on board, they took an active role in redesigning BHA's composite finishing area, where surfaces are trimmed and prepared for painting. Using Lean principles, employees made improvements that cut cycle times in half and reduced the number of people from 18 on two shifts to 10 on a single shift.

Without making empowerment an explicit element of your Lean implementation, continuous improvement is not possible. And without continuous improvement, Lean is not possible.

Quality
Another problem companies face when implementing Lean in China is that the standards for product quality may be inconsistent with management expectations. Expectations of exceptional quality have been largely assumed at U.S. manufacturers for nearly 30 years. Since the near meltdown of the domestic auto industry in the mid-1970s, due to the invasion of higher-quality Japanese imports, the drive to improve quality has been a focus of management and labor.

The Lean premise-that there is always room for improvement-is widely accepted in the States. In other words, there is no such thing as a perfect product, process or service, so there is always more that can be done.

But in China, a "just good enough" philosophy means that a level of quality can be reached where there is no need to make further improvements. China's People's Daily Online characterizes this as a "make-do attitude," noting that while Chinese plants may have the capability to produce quality products, many-especially small-to medium-size enterprises-tend to have a very short-term perspective. The assumption is that if a ready buyer is available today, then current quality levels must be sufficient.

In addition, cultural norms that discourage individuals from "making waves" contribute to a lack of accountability within the Chinese work force. There is a tendency to accept a product or process as "good enough," even when there is clearly room, in Western eyes, for improvement. This acceptance of the status quo is at odds with Lean principles.

The leaner an operation becomes, the more it depends on all participants to meet their commitments and strive to improve.

Generally, the overriding manufacturing principle in China centers on simply getting products out the door. Quality, therefore, can be pushed down the priority list. And when metrics and performance evaluations are not tied to product quality, there is no incentive to eliminate waste, seek continuous improvement or simplify processes.

Workers
Factories in the coastal cities of China attract workers from rural, agricultural villages with little understanding of basic manufacturing concepts. The chances that they will be able to effectively identify inefficiencies and suggest process improvements are slim. This can be especially troublesome if the management ranks are staffed with weak managers, ill-trained in Lean concepts, because it leaves direct labor with no place to go to develop those skills.

The lure of money and much-respected titles throws a wrench into Lean deployment as well. In the midst of the economic boom, many Chinese frequently jump from job to job in search of bigger paychecks from companies willing to step up salaries as a way to secure their foothold in the country. Often more appealing than the money is the title that comes with a new job and the importance that title bears in climbing the social ladder and garnering higher personal stature.

As workers move around, they take with them intellectual property and trade secrets, and put them to use at the competition's manufacturing facility. The combined headaches of high turnover and the high incidence of IP theft make a consistent Lean deployment even more challenging.

Major loopholes in Chinese law and in the country's trademark and patent system exacerbate the problem. Many Chinese patents are granted without examination of their originality, making it easy for local companies to claim others' innovations as their own. And IP theft isn't limited to smaller companies with obscure products. Companies like General Motors, Cisco and Sony have recently complained that their designs or formulas for everything from cars and routers to Playstations have been stolen.

Suppliers
Cultural obstacles aren't the only barriers to ramping up Lean manufacturing practices in China. Success has as much to do with supplier reliability as it does with internal process improvement.

Supplier reliability requires predictable quality and predictable delivery. Both must be present to ensure success. An inability to determine when inbound production materials will arrive, whether the material will be acceptable or when customers will receive finished products forces companies to stockpile inventory to meet delivery commitments. Not only is buffering inventory anathema to manufacturing executives, but it also runs counter to the Lean philosophy. More inventory invariably adds steps to the process-not to mention cost-and contradicts the core goal of eliminating waste.

If dependable local suppliers cannot be established, turning to overseas sources may not be the answer either, since government agencies would not be likely to champion Lean concepts.

For example, customs clearance procedures for imports and exports are notoriously complex in China. Shipments can be stalled at airports for days. Drivers have to hand off cargo to other drivers from different logistics providers when they reach provincial borders. Tracking the movement of each parcel is a relatively new concept. And it requires a well-defined way to retrieve data-along with a vast amount of patience.

Making hard decisions
Although standardizing international operations on a Lean production model makes sense from a consistency standpoint, companies must approach a ramp-up in China somewhat differently from a factory implementation in the States.

Fundamentally, the challenges that exist in China require careful planning and precise decision-making. To overcome cultural barriers, executives must ask themselves whether the company's existing management team has the know-how to implement sweeping changes.

A cornerstone to a successful Lean rollout involves support from middle and senior managers. If managers are not able to rally and empower the work force to Lean compliance, then determining the cause of the problem is a critical next step. Does the problem lie in a lack of support and enthusiasm from senior management? Are middle managers improperly trained on the cultural hurdles, or do they lack the resources necessary to enforce Lean?

Once those questions have been answered, another decision needs to be made: Would native Chinese managers or expatriates be better-suited to the task? It's not an easy question to answer. On one hand, native Chinese managers have a grasp of how things are traditionally done and are in tune with cultural manners. On the other, an outsider with a Lean background may be able to introduce, educate and reinforce business and quality practices without bias toward historical precedent.

The recent past might offer some guidance. When Japanese automakers like Toyota, Honda and Nissan built their first plants in the United States, they relied heavily on Japanese managers to develop and institutionalize the quality and Lean concepts that differentiated their products from domestic producers. While initial efforts met with heavy resistance, and even ridicule, the passion and determination of the Japanese "teachers" eventually won over their American "students." Demonstrating this same level of passion and leading by example-indeed, evangelizing Lean concepts-are critical requirements of expatriate managers.

Bringing Lean to China also demands a mind-set change from top management, particularly in how it views work force longevity. If companies want to exceed productivity, profit and revenue expectations, they must invest in their work force and establish employee retention programs that promote long-term tenure and loyalty.

To retain employees, managers need to stop thinking that they have a "disposable" work force. Companies must invest in cross-functional training that empowers employees and makes them more valuable to the manufacturing operation. Training sessions should go beyond Lean concepts and encompass everything from inventory control and planning strategies to the definition and use of metrics.

Plantronics Inc., a leading manufacturer of headsets, clearly understands that the people with the most intimate knowledge of the best way to build a product are the ones who build it day in and day out. Work force retention is a key element of Plantronics' manufacturing strategy; the company prides itself on highly knowledgeable employees who can produce exceptional quality. This philosophy is a driving force behind the design of the company's new facility in Suzhou, which will employ systems and rewards that encourage people to seek continuous innovation practices.

Better compensation is another way to win employee loyalty. Pay should be more directly tied to skill sets and performance evaluations based on how well Lean practices are distributed throughout the organization. Closing the gap between compensation and performance metrics may eventually lead to a shift away from the "just good enough" ideology and inspire a new sense of responsibility beyond individual work silos.

With that in mind, employees must believe that they can contribute to the organization's goals and drive some of the change being imposed on them. Managers should recognize accomplishments that took root on the shop floor. For example, one company used a suggestion box to collect ideas that would fuel greater efficiencies and publicly recognized workers who showed initiative and suggested new time-saving techniques.

Addressing internal issues is only one part of the decision to set up Lean in China. Management must also figure out how to tackle such things as supplier practices and the convoluted logistics infrastructure.

As with all new ventures, replicating manufacturing strategies in a place as evolutionary as China comes with its share of headaches. The right amount of patience, forethought and understanding, though, will help ease the pain and result in a significant return on investment in the long run.

Shoshanah Cohen is a director and Anthony Paolini is a principal in the supply chain practice unit of Pittiglio Rabin Todd and McGrath (PRTM), a global management consulting. Contact the authors at mailto:scohen@prtm.com

Copyright 2004 © CMP Media, LLC